WASHINGTON — In what some maritime experts are calling “the most historic moment for U.S. maritime interests this century,” Governor Albert Bryan will announce a new U.S. flag open ship registry next week.
Governor Bryan is set to make this historic announcement while attending the National Governor’s Conference in Washington D.C. on Tuesday.
Meanwhile, a U.S. Virgin Islands-based expert in maritime law said that the change stands to have a significant effect on territorial coffers.
“At a minimum, if companies take advantage of it, the V.I. gets some registration fees,” the maritime law expert told the Virgin Islands Free Press today. “But what seems natural to me is that they then become EDC companies. Essentially get the benefit of being under the American (or VI) flag while getting the tax advantages of the EDC program.”
The shipping industry moves more than $4 trillion of imports and exports into and out of the United States every year but, for the past fifty years, the U.S. has increasingly relied on shipping lines from other countries to carry most of these goods, gCaptain first reported. Currently, there is only one U.S. flag shipping company in the top 30: Matson, ranked 26th, with only 0.2% of the global market share.
At least 50 percent of the ships that travel international waterways are registered in just three jurisdictions — Panama, Liberia, and the Marshall Islands. Each of these registries was formed with the support of the U.S. government and each originally promised commercial advantages along with some degree of protection from the U.S. Navy. Panama and Liberia, however, currently have no protection agreement in place. The Marshall Islands registry is said to have a security “understanding” with the United States, but the details of which are not clear.
According to a white paper released by the Center for Ocean Policy and Economics (COPE) at the Northeast Maritime Institute, ships registered under the new U.S. Virgin Islands Flag will realize physical and cyber protection from relevant U.S. agencies and the new flag will also provide a key competitive advantage to ship owners.
“The future is becoming increasingly complex and uncertain,” said Eric R. Dawicki President of Northeast Maritime Institute and an executive member of COPE, in an interview with gCaptain. “We believe that customers, ports, financial markets, and insurance companies are ready to reward ship owners that are more transparent and lean into environmental, social, and corporate governance (ESG). We believe a US open registry will protect the rights of seafarers and provide US mariners with more opportunities.”
Dawicki was quick to point out that, while this is an open registry, it will not be a flag of convenience. The US Virgin Islands is one of only five official Overseas Territories of the United States. American Virgin Islanders are American Citizens and USVI companies are subject to United States law. The new registry hopes to attract ship owners that understand this and are willing to lean into ESG initiatives.
“We are looking to help shipowners navigate an increasingly uncertain world,” said Dawicki. “We are looking to help those who want to do good by doing well.”
An increasing number of customers, financial institutions, and regulators are looking to do business with companies that hold themselves to a higher standard. Less clear is if ship owners will be willing to ditch cheap flags of convenience for better access to capital and cargo. It is also unclear how the USVI flag will navigate the Jones Act, if it will have a separate seat at the International Maritime Organization (IMO) or share one with the US delegation, and the depth of its relationship with classification societies, regulators at the U.S. Coast Guard, the US Navy, and shipowner groups like ICS, BIMCO, INTERTANKO, and INTERCAGO… which have all been calling for higher standards within the broader industry.
Former U.S. Deputy Secretary of State and the first Director of National Intelligence, John Negroponte will be providing opening remarks at the National Press Club luncheon on Tuesday.